SAP Material Management Document Essay Example

into a single module. It is used by companies to meet their business demands. SAP MM, also known as SAP Material Management system, is a module that works in various business activities. In SAP, a business course is referred to as a "Module". SAP Materials Management (MM) is part of the Logistics area and helps handle the procurement process of an organization.

It compliments all features of material management (decision making, regulate etc.). It is the mainframe of the Logistics area which includes features like Marketing and Sales, Design Development, Plant Control, Project Feasibility, Warehouse Development and design which are very dependent on Materials Management module.

Features of SAP MM

The basic functionality and features of SAP MM system are:

SAP MM module of SAP deals with material and inventory management. Material Management module takes charge of the fact that there is no gap in the material which can hinder the Supply chain process in any company. SAP MM expedite the obtaining and material handling activities taking into account both time and cost factors. It works with detailing the material management (both the services and delivery output) modules of an identity with the focus on keeping up the efficiency, decimating various cost factors and improving the overall productivity and also be able to handle the real time changes. It works with the Procurement handling, managing the mater data for both the client and vendor, account recognition and evaluation of the various materials, Inventory management and invoice authentication, Material requirement handling and Planning.

Benefits of SAP MM

Most business associations need to deal with a procedure that starts with sourcing and acquisition of various types of materials and assets.

Thus, from the time that such acquirement starts, to the time that the installment is finished, there is the need for a procedure that is proficient, viable and bodes well also. This is precisely where SAP MM becomes possibly the most important factor. With such learning levels, a business association can appreciate:

• Better seller administration,
• Streamlined information stockpiling, recovery and use,
• Better buying systems,
• Smoother stock administration,
• Higher nature of materials assessment, and
• Overall change in quality control also.

Considering the way that low quality materials will cut down the general nature of the completed merchandise or items, each business association will in reality need to put resources into smooth materials administration forms. A portion of the advantages of SAP MM touch upon key viewpoints, for example,

• A superior comprehension of hierarchical structure,
• Better control over coordinations and receipt check,
• Clearer comprehension of various buy methodology, and
• Forecasting materials prerequisites.

Creating and utilizing MIS or Management Information Systems with particular reference to materials administration.

SAP MM Process Flow

The standard procurement cycle for an organization or material is composed of the following phases:

Determination of Requirements

Material requirements are identified either in the customer departments or through materials planning and control. (This can cover both MRP relevant and the order-based approach to inventory control. The continuous monitoring of stock levels of materials defined by master records, use of the reorder point method, and forecasting based on past usage are important components of the latter.) You can enter purchase requests yourself, or they can be generated automatically by the materials planning and control system.

Source Determination

The Purchasing component helps you identify

potential sources of supply based on past orders and existing long-term purchase agreements. This speeds up the process of creating requests for quotation (RFQs), which can be sent to vendors electronically via SAP EDI, if desired.

Seller Selection and Comparison of Quotations

The framework is designed for recreating evaluation situations, allowing you to compare multiple quotations. Dismissal letters can be sent automatically.

Buy Order Processing

The Purchasing system gathers information from the request and the quotation to assist you in creating a purchase order. Just like with purchase requests, you can manually generate POS or have the system generate them automatically.

Merchant planning agreements and contracts (in the SAP System, types of longer-term purchase agreement) are also supported.

Follow-up for Purchase Orders

The system checks the update time frames specified by you and, if necessary, automatically prints reminders or expediters at the predefined intervals. It also provides you with an up-to-date status of all purchase requests, quotations, and purchase orders.

? Receiving Products and Managing Inventory

Receiving personnel can confirm the receipt of goods simply by entering the Po number. By specifying acceptable tolerances, buyers can limit over- and underdeliveries of ordered goods.

Verification of Receipts

The system supports the verification and matching of invoices.

The records payable representative is informed about changes in amount and value because the system has access to purchase order (PO) and goods receipt information. This speeds up the process of reviewing and approving payment requests.

Regular Tables used by SAP MM:

Here are a few important Common Tables used in Materials Management Modules:

• EINA Purchasing Info Record-General
  

Data

• bunches
• T024 Purchasing Groups
• T156 Movement Type
• T157H Help Texts for Movement Types
• MOFF Lists what sees have not been made
• A501 Plant/Material
• EBAN Purchase Requisition
• EBKN Purchase Requisition Account Assignment
• EKAB Release Documentation
• EKBE History per Purchasing Document
• EKET Scheduling Agreement Schedule Lines
• EKKN Account Assignment in Purchasing Document
• EKKO Purchasing Document Header
• EKPO Purchasing Document Item
• IKPF Header-Physical Inventory Document
• ISEG Physical Inventory Document Items
• LFA1 Vendor Master (General area)
• LFB1 Vendor Master (Company Code)
• NRIV Number range interims
• RESB Reservation/subordinate prerequisites
• T161T Texts for Purchasing Document Types

  Exchange Codes:

  • RFQ to Vendor – ME41Raising Quotation – ME47Examination of Price – ME49Production of PO – ME21NProducts Receipt – MIGOReceipt (Bill PAssing) – MIROProducts Issue – MB1APhysical Inventory – MI01( Create doc)MI04 (Enter Count)MI07 (Post)

    SD Process Flow:

    The business archives you make are singular reports

however they can likewise frame part of a chain of between related records.

You can use the framework to record a client's phone request. Afterwards, when the client asks for a quote, you can refer to the recorded request and create one.

The client submits a request based on the citation provided, and a business arrangement is made in response to the citation. The merchandise is then sent to the client, and they are billed accordingly. However, after receiving the merchandise, the client claims credit for some damaged products. In response, a free-of-charge delivery is made in accordance with the business arrangement. This entire process, including the order, citation, business arrangement, delivery, receipt, and subsequent free delivery, creates a record stream or history. The flow of information between these records reduces the need for manual processes and makes issue resolution more straightforward.

Request and citation administration in the Sales Information System help with organizing and controlling deals.
Exchange Codes:

• Request – VA11/VA12/VA13
• Citation – VA21/VA22/VA23
• Deals Order – VA01/VA02/VA03
• Conveyance – VL01N/VL02N/VL03N
• Charging/Invoicing – VF01/VF02/VF03

Procurement Processing

To meet business requirements, organizations need materials. The procurement process involves purchasing materials and obtaining services from vendors. It is important to streamline the entire procurement activity, ensuring accurate measurement of acquired materials at the right time and cost.

The procurement processing can be further categorized as follows:

• Basic Procurement Special Procurement
• Basic Procurement

Basic procurement entails acquiring the necessary amount of services or materials while considering cost and time.

important to consider factors such as obtaining the best price, maintaining product quality, vendor relationships, and availability.

Procurement Lifecycle

Most modern organizations follow a consecutive series of steps in their procurement process:

Requirement and Information Procurement:

The acquisition process begins with gathering information about the desired product and its quantity.

When it comes to required items and services, it is necessary to find suppliers who can meet the requirements.

Contacting Suppliers

After gathering requirements, one will search for suppliers who can fulfill them. Based on that, a request for quotation or information request can be made with them.

Reviewing Background

Once the supplier is identified, product/service quality is checked, and any requirements for services such as installation, warranty, and maintenance are discussed. Some samples of the products can be obtained for quality examination.

Negotiating

Multiple negotiations with suppliers are conducted regarding price, availability, and delivery schedule of the products/services.

Afterwards, a written agreement is made between the provider and the requesting party. This agreement contains important details such as cost, quantity of material, delivery date, etc.

Order Completion

The requested material is then sent out and delivered to the requesting party. The provider is paid accordingly for their services. Processing and installation of the product or services may also be included.

Consumption, Maintenance and Disposal

As the product or service is used up, its performance is assessed and any necessary support services are examined.

Contract Renewal

If the product or services have been consumed or if the contract needs to be renewed after expiration, or if there's a need to reorder the product or service again, the company reviews its past experiences with vendors and service providers.

If the company needs to reorder items or services, they have the option to reorder from the

previous supplier or consider new suppliers.

The Basic Procurement is divided into two subparts:

• Procurement for Stock Vs Consumption
• External Vs Internal Procurement
• Procurement for Stock Vs Consumption
• These two points help differentiate between Stocks Vs Consumption:

For Stock- A stock material refers to a material that is kept in stock. These materials are stored once received from the vendor. The supply of this material continues to increase or decrease based on the quantity received or issued.

To ensure that a material is properly stocked, it must have a master record within the system. If the procurement is for immediate consumption, the user should specify the usage purpose. To acquire a material for consumption, it may need to have a master record within the system.

External Vs Internal Procurement

The following points outline the differences between external and internal procurement. External procurement involves obtaining goods or services from external vendors. There are three main types of external procurement supported by the purchasing section of the IT system.

One-time orders are typically used for sporadically requested materials and services. For regularly and significantly ordered materials, we can negotiate pricing and conditions with the vendor and document them in a contract. Contracts also specify the validity date. If a material is regularly ordered and requires a precise delivery schedule, a scheduling agreement is established.

Huge corporate associations may claim different separate organizations or organizations. Within Procurement is the process of acquiring material and services from within the same company. Therefore, each of these companies maintains a complete accounting system with specific Balance, Profit and Loss Statements so that when a transaction occurs between them, it will be recorded.

Unique Procurement

Unique stocks

are stocks that are managed differently as these stocks did not belong to the company and are being kept at a specific location. Exceptional acquisition and unique stocks types are divided into the following areas.

Dispatch Stocks

The material available at our store premises still belongs to the merchant/owner. If you use material from dispatch stocks, you will need to pay the merchant.

Outsider Preparing

In third-party processing, a company sends a business order to an external vendor who directly sends the goods to the customer. The business order is not processed by your company, but by the vendor.

Outsider things can be entered in buy orders, buy requests and deals orders.

Pipeline Taking Care of

In pipeline taking care of, the organization needs not to request or store the material included. It is possible as and when required by means of a pipeline (for instance, oil or water), or another style of link, (for example, power). The material that is devoured is settled with the merchant (vender) all the time.

Returnable Transport Stock

The organization orders merchandise from a

seller (vender). The products are conveyed with returnable transport bundling (beds, compartments) that has a place with the merchant (vender) and is put away on the client premises until they return it to the organization.

Subcontracting

The subcontractor receives segments from the requesting party to deliver an item. The requested item is ordered by your company through a purchase order. The components needed by the vendor to manufacture the requested item are specified in the purchase order and provided to the subcontractor. Stock exchange using stock transport order Products are acquired and supplied within a company.

One plant arranges the products inside from another plant (accepting plant/issuing plant). The products are secured with a unique type of procurement request – the stock transport order. You can request and monitor the transfer of goods with a stock transport order.

SAP MM-Organization Structure

Organization structure is the framework of organization in which business is conducted. The organization structure consists of multiple levels that have relationships with each other. Organization structure is also referred to as enterprise structure.

Venture structure consists of multiple hierarchical units that are interconnected. The SAP Implementation Guide is the tool used when a customer purchases SAP software, which comes in the form of a CD. During the initial installation of SAP, it has its default setup that needs to be configured according to the customer's requirements and organization. The configuration of SAP software, such as adding fields, changing handle names, modifying drop-down lists, etc., to align with the organization's operations, is done through a control called IMG (Implementation Management Guide). IMG is where we define the venture structure and other settings necessary for the proper functioning of SAP

software based on the organization's needs.

SAP IMG Path

The first step in arranging our association as per our requirements is to access the execution (IMG) control screen. This can be done in 2 ways:

• Through the menu
• Using a transaction code
• Through the menu

We can access the IMG by following these steps:

• SAP Easy Access => Tools => Customizing => IMG => Execute Project
• SAP IMG Path
• Using a transaction code

The best and easiest way to access any SAP screen is through a transaction code. The transaction code to access IMG is SPRO (SAP Project Reference Object). Enter the transaction code in the order field and then click enter.

• SAP TCODE
• SAP IMG

The IMG screen can be accessed by following these steps:

• After SPRO, click on SAP Reference IMG on the next screen.
• SAP IMG

The next screen will appear as follows. This is the final screen for making configurations.

• SAP Display IMG

Each organization has a system or structure defined by the entire business. The enterprise structure represents an organization in the SAP ERP system and is divided into different hierarchical units that are grouped

together for legal or business reasons. The enterprise structure defines various levels within an organization.

These levels are arranged in a hierarchy that represents the functioning of an organization. The organizational structure in MM consists of the following levels:

• Customer
• Organization Code
• Plant
• Capacity Location
• Acquiring Organization
• Acquiring Group

The organizational structure is depicted in the following diagram, with the customer at the top, followed by multiple organization codes and plants. The plants have various capacity locations and their own or centralized purchasing organizations.

Customer

The definition of a client is as follows: Customer is a business organizational unit in the R/3 system.

It has its own arrangement of ace information with autonomous table sets. As per progression, Client is at most elevated amount in SAP framework. Information that is kept up at customer level is legitimate for every single authoritative level.

Company Code

The key clarification of Company Code is as per the following:

• Inside Client, Company code is the free bookkeeping unit.
• It is a legitimate substance that has its own benefit, misfortune and adjust proclamation.
• It is the littlest unit in association for which a complete free account set can be reproduced.

Plant

The central clarification of Plant is as per the following:

Plant is an authoritative unit inside an organization where exercises happen.

A plant is an organizational unit that produces merchandise and makes products accessible for the organization. It can be a manufacturing facility, a warehouse distribution center, or a local sales

office within logistics. The plant is subdivided into various aspects.

Capacity Location

The definition of Storage Location is as follows:

Storage location is an organizational unit that distinguishes between different material stocks in a Plant. It is the physical place where stock is kept.

A plant can consist of different storage areas, and all information is stored at the storage area level for a specific storage area.

Obtaining Organization

The essential explanation of Purchasing Organization is as follows:

The Purchasing Organization is an organizational unit under the company or plant that is responsible for procurement activities based on requirements. It is responsible for external procurement.

• The Purchasing organization can exist at the customer level, known as a centralized buying organization.
• The Purchasing organization can exist at the company or plant level, known as organization-specific or plant-specific.
• Different types of purchasing can be described as follows:

Integrated Purchasing

The purchasing organization is not assigned to any company code; it procures for all company codes belonging to different customers.

Organization-Specific Purchasing

The purchasing organization is assigned to a specific company code. The plant belonging to the company code can make purchases through this purchasing organization.

Plant-Specific Purchasing

The purchasing organization is assigned to a specific plant. Only this particular plant can make purchases through this purchasing organization.

Purchasing Group

The basic explanation of a Purchasing Group is as follows:

The purchasing group is an organizational unit responsible for regular procurement activities within a company.A buyer, or a group of buyers, is responsible for procurement activities within a purchasing organization.

Prerequisite Analysis

SAP MM provides functionality for maintaining the following master data:

• Materials
• Services
• Vendors
• Purchasing Info Records
• Source List
• Vendor Evaluation Criteria
• Conditions (Commercial)
• Payment Terms

Proposed Business Process: Materials: The material document contains information on all the materials that a company acquires or produces, stores, and sells. It serves as the central source for retrieving material-specific data. This data is stored in individual material master records. The material master is used by all components in the SAP Logistics System. The integration of all material data in a single database object eliminates redundant data storage.The material master in the SAP Logistics System is essential for various functions. These functions include:

• Purchasing, where it is used for requesting
• Inventory Management, where it facilitates product development postings and physical stock
• Invoice Verification, where it is used for posting requests
• Sales and Distribution, where it supports sales order processing
• Production Planning and Control, where it aids in material requirements planning, scheduling, and work planning

The Vendor Master record is another important component. It stores information about the different services that may need to be acquired. The data within these vendor records controls how transaction information is posted and processed for a particular vendor.

The seller master record contains all the necessary information for working with your vendors. This master record is used in both Accounting and Materials Management. By storing the vendor master data centrally and sharing it throughout your organization, you only

need to enter it once. This prevents inconsistencies in master data by maintaining it centrally. If one of your vendors changes their address, you only need to enter this change once and your accounting and purchasing departments will always have updated information.

Buy Information Records

You can use this feature to store information about a vendor and a material as master data at the purchasing organization or plant level.

You can retrieve data records for different acquisition types (standard, subcontracting, pipeline, dispatch).

Source List

The source list is used in managing sources of supply. It specifies the approved (and restricted) sources of a material for a specific plant within a defined period. Each source is defined by a source list record.

Vendor Evaluation Condition

The Vendor Evaluation section assists you in enhancing your procurement processes for both materials and services.

Necessity Analysis

The utilization of modification levels allows for the recognition of material or record changes implemented with reference to an improvement number. When future manipulation of the BOMs for these materials or records becomes necessary, they can be easily located and accessed using either the change number or the modification level. It is possible to assign a modification level to a material either through a building change administration function or during the processing of a material master record or BOM for the material.

Over Conveyances

Within the standard guidelines, over conveyances are prohibited.

If an over conveyance occurs, the system will display an error message. To allow over deliveries, you can provide the following information in the purchase order:

Unlimited Tolerance

If this flag is enabled,

any size of over delivery is allowed. The system will not display any message.

Over Delivery Tolerance

You can specify a percentage of over delivery tolerance in the purchase order. If the quantity of goods received exceeds the order quantity plus the over delivery tolerance, it will not be accepted by the system.

• The Scrap Calculation function is essentially the Bill of Materials for production planning.
• This can be addressed by using the relevant fields in net requirements planning and booking of MRP2 view in material management.
• The system distinguishes between the following units of measure.

Base Unit of Measure

This is the unit of measure in which the quantities of a material are managed. This is the unit of measure in which the supplies of a material are managed. The system converts all quantities entered in different units to the base unit of measure.

Optional Units of Measure

Individual departments may have their own units of measure.

For example, different departments such as Purchasing, Sales, or Warehouse Management (WM) may use different units of measure. These units of measure, other than the base unit of measure, are referred to as option units of measure. The MM System supports the following option units of measure:

Arrange Unit

Allows a material to be ordered in a unit different from the base unit of measure. The order unit is automatically suggested in purchasing functions and can be changed.

Sales Unit

Allows a material to be sold in a unit different from the base unit of measure. The

sales unit is automatically suggested in the sales order and can be changed.

Unit of Issue

The unit of issue is the unit of measure in which materials are issued from the Stores. It allows for utilization, stock exchanges, exchange postings, and physical inventories to be recorded in a different unit from the base and stock-keeping units. The use of FIFO valuations helps to determine the value of a material's supplies as accurately as possible. FIFO (first in, first out) assumes that the first supplies received are the first to be consumed. Therefore, the stock's value is calculated based on the most recent stocks received.

FIFO valuation has different uses:

The system calculates the FIFO values of the materials when running FIFO valuation. The results are displayed as a list that includes the following information:

• The end stock amount and closing stock value for each material for the specified period, as well as the FIFO value and the difference between that and the stock value.
• The net value based on the lowest value determination (if FIFO valuation is done with minimum value analysis).
• The quantities for each valuation area or company code by material stock record.
• The quantities by valuation area or company code.

Date Freezing – There are various features available in the SAP System for scheduling the activation of newly created materials.